As you may be aware, the Budget savings (Omnibus) Bill 2016 (“the Bill”) has been introduced to Parliament. The bill contains the ‘Single touch payroll reporting’ (“STPR”) measures, which introduce significant changes to current employer reporting requirements.
The STPR rules are designed to reduce compliance cost for employers by providing relief from certain year end reporting requirements. However, employers subject to the new rules will need to report payroll data more regularly to the ATO.
Which employers will be affected?
From 1 July 2018, ‘substantial employers’ will need to comply with STPR. If an employer has more than 20 employees on 1 April 2018, it will be considered a substantial employer. For the purposes of the Bill, employees are defined under common law such that contractors and other individuals that may be considered employees under the extended meaning of employees under the Superannuation Guarantee (Administration) Act 1992 are excluded from the definition.
Further, the headcount to establish employees does not take into account the full-time equivalency, casual nature or the fact that they work overseas.
Employers satisfying the ‘substantial employer’ test at 1 April in a later year, will need to comply with the STPR rules from the following 1 July. Importantly, once an employer becomes a substantial employer, it will need to continue to report under STPR even where it later ceases to meet the definition of a substantial employer, unless the ATO grants an exemption.
Employers with less than 20 employees may voluntarily choose to report under the STPR.
What needs to be reported?
The following payments will need to be reported to the ATO on or before the payments are made:
- Ordinary times earnings and salaries
- PAYG withholding amounts
- Superannuation contributions
Essentially, employers will need to lodge reports to the ATO via STPR compatible payroll software as part of their payroll process. Employers already compliant under the SuperStream measures are likely to satisfy the STPR reporting requirements for superannuation contributions.
The Bill does not propose any changes to the current due dates for payment of PAYG withholding liabilities.
What reliefs will be available?
Employers subject to the STPR rules will be exempt from the following reporting obligations:
- Payment summaries to employees
- Payment summary annual report to the ATO
It is envisaged that monthly activity statements will be pre-filled with information reported to the ATO through the STPR enabled software.
The Bill also introduces further measures to streamline the employee commencement process by integrating data from the STPR software into TFN declarations and superannuation choice forms.
At this time, no action is required by employers on the basis that the Bill is still subject to passage by Parliament and in any case, will not be in effect until the 2019 financial year.